Research

UK councils invest £9bn of pension funds in fracking companies – new research

180829 Ros Wills

Cuadrilla’s shale gas site at Preston New Road near Blackpool where fracking is expected this month. Photo: Ros Wills, 29 August 2018

Data released today suggests that UK councils have invested more than £9 billion from staff pension funds in fracking companies, despite opposition to the process.

The news comes as the first high volume hydraulic fracture in the UK since 2011 could be days away.

Many councils have opposed the concept of fracking and there are planning policies against the process in Scotland, Wales and Northern Ireland. The most recent public opinion survey puts support for fracking on 18% and opposition at 32%.

Despite this, council funds remain invested in the industry overseas, according to the data published by 350.org, Platform and Friends of the Earth.

According to the data, the largest single pension fund investment in fracking companies is estimated at almost £1bn by Greater Manchester. This is nearly double the amount in the next highest, West Yorkshire, at just over £0.5bn.

Councils with the highest percentage of their pension funds invested in fracking are: Dumfries and Galloway, Greater Manchester and the London Borough of Merton, each with 6-7%.

In Lancashire – the site of the UK’s first ever horizontal shale gas well – the pension fund has invested £187m, or 2.6%, in companies that rely on fracking. In 2015, the county council refused Cuadrilla’s plans to frack at two sites in Lancashire and the authority opposed the schemes at two public inquiries.

In Scotland, where there is a moratorium on fracking, the data says councils collectively invested a total of £927m of pension fund money in 12 companies that frack.

Glasgow City Council has the largest investment in Scotland at £388m, through management of the Strathclyde Pension Fund, the country’s largest council pension fund.

Scottish investment in fracking appears to be increasing. Scottish council have £35m more invested in companies that frack than a similar study found a year ago.

Paul Wheelhouse

Paul Wheelhouse, the Scottish Energy Minister, announcing a moratorium on fracking, 3 October 2017

 

Last year, more than 60,000 people opposed fracking in a Scottish government consultation. The SNP administration announced it would not support planning applications for fracking and is currently carrying out an strategic assessment of the policy.

Despite this, Scotland’s councils are profiting from a practice that is not permitted in Scotland, the groups argue.

The investment data was compiled from Freedom of Information responses. Platform asked every council that manages a UK local authority pension fund for a full list of investments for the year 2016-2017. It analysed the data to calculate the amount invested in the industry based on 24 companies identified to be participating in fracking. These ranged from multinational companies, such as Shell, BP and ConocoPhillips, to IGas, the smaller stock market-listed operator with shale gas interests in the UK.

A report, Divest Fracking, which accompanies the data said the expansion of gas extraction is threatening to undermine efforts set out in the Paris Agreement to limit the global temperature increase to 1.5C.

It said analysis by Oil Change International had shown that reserves in currently operating oil and gas fields alone would resulting in warming beyond 1.5C

“This means that fossil gas must be phased out, not increased.”

The report added:

“Getting UK councils to divest from all fossil fuels represents a powerful way to do [this]”

Research by GoFossilFree.org shows that commitments to divest fully from fossil fuels have been made by seven councils in Derby, Hastings, Monmouthshire, Oxford, Reading Southwark and Waltham Forest.

Another 10 councils have made partial commitments to divest: Brighton, Bristol, Cambridge, Hackney, Haringey, Kirklees, Lewes, Norwich, Sheffield and Stroud.

pnr 180828 Ros Wills2

Outside Cuadrilla’s shale gas site at Preston New Road in Lancashire. Photo: Ros Wills, 28 August 2018

Reaction – Lancashire

Matthew Brown, Leader of Preston Council

“It’s disappointing to see local authority pension funds being invested in the fracking industry. Fracking destroys local landscapes, threatens communities and fuels climate change across the globe. Council pension funds should be going to support clean fossil free energy which will secure a good return for members and help tackle climate change.”

Claire Stephenson, Frack Free Lancashire

“It’s incredibly short-sighted and worrying that Lancashire County Council has such a vested interest in a dirty fossil fuel industry like fracking.

“Climate change is an urgent issue and is happening right now across the globe. Our politicians have an ethical and moral responsibility to divest from climate-damaging fossil fuels and show climate leadership by supporting clean, renewable energy.

“This shocking revelation of where our councillors have their pensions invested is unsupportable and we urgently call for change and divestment.”

Reaction – England

Deirdre Duff, divestment campaigner, Friends of the Earth

“UK councils should know better than to invest in fracking companies. These companies are inflicting their fracking operations on communities around the world, and this can have significant impacts. Many UK councils have rightly opposed fracking in their own area – however it is shocking that they still support the global fracking industry. We should remember too that the climate change caused by fracking will affect us all, no matter where the fracking is conducted.”

Sakina Sheikh, divestment campaigner, Platform

“The devastating fires and record temperatures this summer have brought the impacts of climate change home. Neither local communities nor our climate can afford for the fracking industry to win. Our councils are providing everyday support to the frackers, it’s time to stop. It’s time to divest from fossil fuels.”

Reaction – Scotland

Mary Church, Friends of the Earth Scotland’s head of campaigning

“Opening up new frontiers of fossil fuels like fracked gas whether here or in the US is completely irresponsible in the context of the global climate crisis. The Scottish Government and Parliament oppose fracking because of the serious risks it poses to our environment and health. If fracking is too dirty and dangerous for us here in Scotland we shouldn’t be trying to profit from it taking place in other countries either.

“The pressure will be on SNP, Labour, Lib Dem and Green Councillors on Pension Committees whose parties oppose fracking in Scotland to put in place an investment approach that supports a healthy future for us all, instead of making a quick buck from dirty industries like fracking.”

Stephen Smellie, UNISON Scotland deputy convenor and Strathclyde Pension Fund member

“Using pension funds to invest in fracking is wrong on environmental and safety grounds. Fossil fuels in general and fracking particularly are risky investments given doubts about the financial viability of fracking and the need to reduce the reliance on fossil fuels. There are other better ways to invest our pension funds and Councils should be living up to their climate change obligations, investing in clean energy solutions, not more fossil fuels.”

  • A global day of action, Rise for Climate, is planned for Saturday (8 September 2018) to promote 100% renewable energy.

70 replies »

  1. Thanks for the advice AD. I’m sure there is a point there for some, but others will buy Igas at 75p and sell at £1.20 and feel happy that they didn’t invest in Tesla.

    Maybe those who bought Sirius shares when they were 6p are now also quite happy?

    Generalisations are dangerous, and misleading.

    • BUT MARTIN ,

      IGAS went from approx £1 60 per share to about 4.5 pence ( four and a half pence )

      The share was then diluted in to oblivion and then re-listed at 76 pence …

      TRY comforting those long term investors that have lost the shirt of their backs.. For them the £1 20 share price you talk of, is still LESS THAN 10 PENCE to them.

      • Jack

        Carillion ( bust ) , Footastlum ( today ) Johnstone Press, Cadence ( chasing Lithium ), so on and so forth.

        Lots of shares tank. Some come back from the dead, ( Gulf Keystone, Lonmin ).

        It all depends when you bought in as to the return ( or so says my 1982 penny shares book ).

  2. Really refracktion? Replaced the diesel now? Replaced your plastic keyboard with a wooden version?

    Yes, some of us are consistent. Some of us are very forgetful-putting it politely.

    Not jibes at all. Just like to clear the fog away, old thing. Let the light in.

    • BTW Martin – a study in The Engineer concluded that “new, well maintained diesel cars, built to the latest standards have similar emissions to new petrol vehicles” and that “well maintained diesel vehicles have quite similar levels of particulate emissions to petrol cars”. It’s time you stopped hyperventilating about diesel cars and concentrated on the real issues old fella.

  3. Ermm, petrol is also a fossil fuel, old chap. Switched off regarding electric or hybrids?

    I would hate to do a jigsaw with you refracktion. You only see part of the picture.

    It seems it is a habit impossible to break for the antis.

    I thought we were discussing the merits of fossil fuel investment? If you have forgotten your first post on the subject perhaps you need to check the substance of that?

    Wriggling, but still hooked.

    • Well Martin, we do seem to have had this conversation before. We all have to live in the real imperfect world. Effective change needs action by government on a macro scale and nudges on a micro scale. Instead we seem to have macro level inaction and inconsistent nudges or even nudges in the wrong direction.

      I would hate to do a jigsaw with you too, as you would obviously fixate on individual small pieces that don’t fit anywhere yet whilst everyone else tries to make something of the big picture.

      For example here we are trying to discuss fossil fuel divestment with the grown ups and you are playing with cars. Do at least try to stick to the subject at hand.

  4. You keep assuming that investors in AIM companies are required to be long term investors, Jack. Whilst there may be some sense to that for Biotech type start ups, it is quite unusual in other AIM stocks, and particularly so for oil and gas exploration companies.

    AIM is no different to other markets in that you have to buy at the right price and sell at the right price. You need to be quicker perhaps, but most AIM investors know that.

    Every investor blames someone else if they make the wrong call. I suspect there are many more who thought bank shares were a safe bet!

  5. Fossil fuel driven cars without fossil fuel investment!

    Now, there is the anti world in one small phrase. I can shorten it even further-fantasy.

    This so reminds me of when the Newbury by-pass was being completed. The fantasy was exposed as the facts broke the surface.

  6. So The Labour Party are against fracking?

    Greater Manchester a Labour run Council are heavily invested in fracking to the tune of £989,047,680… Hmmmm…

    Lancashire Council has £184,600,000, is that what saying no to fracking means?

    Oh and Scotland £972 Million

    Wales £Billions, lost track now

    In fact £9,000,000,000 is invested by Local Councils in the U.K into fracking…

    Nimbyism on a Billion Pound scale…

    https://www.blackpoolgazette.co.uk/news/business/criticism-at-lancashire-county-council-s-pension-fund-investments-in-companies-linked-to-fracking-1-9331949

  7. Not hard at all refracktion. Once you accept reality then it offers plenty of joy. The difficulty arises for those who don’t. Happily, the latter are a minority, and the majority are sympathetic and do offer support. They recognise where that support is required as it is often signalled by an Emoji-the human equivalent of a dog sticking their rump in the air to signal to the Alpha male that they need support.

    I suggested last week, this week could be interesting. So far, going that way.

  8. “Most of us”???

    Maths still a problem I (sorry, must join in) “we” note!

    Did the last quarterly survey not show antis were a minority and in decline? Can quite understand why if they are having to try and survive on rubbish pensions, and the cost of energy keeps on rising.

    • I said “most of us here” Martin – keep up 🙂

      “Did the last quarterly survey not show antis were a minority and in decline” – Surely you are not embarrassing yourself again by referring to the BEIS Wave 25 survey that showed 32% oppose while only 18 % support shale gas are you? Golly you are! The series of questions they decided was too embarrassing to keep running?

      So if we antis are a minority and in decline what would you call the pros who used to have 29% support before people found out about fracking when it slipped to 13% and got a dead cat bounce to 18% after the scaremongering about Putin last Winter?

      You guys are surely a superminority waiting for a bed in intensive care.

      • Look at it this way if the U.K Councils are confident to invest £9,000,000,000 of pension money into foreign fracking just wait until the industry kicks off in the U.K in a few weeks

        Where are all the posts saying it isn’t financially viable?

        Lancashire Council investing £184,600,000. Doesn’t reflect what councillors say does it really

        Blows out the water people saying The Labour Party are so against fracking, Greater Manchester Labour Council so confident in fracking they put in £Billion !!!!

        I am waiting for an anouncement by Welsh councils to say that their £600,000,000 plus in foreign shale gas will now be invested in funding the failed Swansea Tidal Lagoon. Swansea alone are invested £73,000,000 alone in foreign fracking operations. Do you think this anouncement will come soon??? I remember the Welsh MPs arguing with Greg Clark in the Commons a few months ago saying it was wrong not to invest in the Tidal Lagoon and how the investment would be so good for Wales whilst banning fracking in Wales. Hypocrisy at its political finest.

        Talking of banning Fracking, Scotland. The gloss the SNP getting caught out in court with ah, it’s not a full ban just a moratorium. Just a temporary ban. Dumfries and Galloway Top the list of all Councils with the highest percentage exposure being 6.73% at £56,115,835. So much for the people of Scotland said no to fracking and the SNP Listened, run by Scottish Labour & SNP.

        Lancashire County Council has £186,600,000 invested in fracking but they say they are against fracking? How does that work?

        And Lancashire County Council won’t reply to questions asked on this matter, surely the people of Lancashire deserve answers…

        Yorkshire with more than half a £Billion invested in Overseas Fracking.

        Maybe all these Councils don’t want fracking in the U.K because it could affect their returns from foreign shores. ie no LNG shipments from America required

        It calls into question all the reasons given by the Local Councils to stop oil and gas development in the U.K, that’s over 9 Billion of them and they wonder why the Government want to take control away from Local Councils when it comes to decisions about oil and gas development…

  9. “Most of us here”-better check that out refracktion. Hardly even a majority.

    32% oppose, means two thirds do not. Oh, and we have not forgotten that most of those opposing were not that knowledgeable on the subject.

    Maths result. Could do better.

    No wonder the anti economic assessments are so poor, when basic maths are such a problem.

    There is no problem with the “pros”. They will not emerge until there is a benefit assessment. Meanwhile, the anti problem is the two thirds who do not oppose and remaining stubbornly so. The fact that the antis wrap themselves in a comfort blanket, full of holes, just emphasises they are left out in the cold.

      • If there was such opposition to fracking in the U.K and this website is always highly placed if you Google shale gas U.K.

        Then why is it only 1,284 people have signed up to drillordrop to receive information they are allegedly passionate about?

        Percentage wise that is just 0.002% of the population and let’s be honest judging by the comments on here half of the people are investors. It’s a bit embarrassing sometimes when people just use it as an extension of LSE BB.

        • Kisheny – are you suggesting that the government’s own polling has got it consistently wrong over the last 5 years or are you maybe just clutching at straws because you don’t like the results?

          You say “half of the people are investors” but I think you must be counting all Peeny’s IDs as though they are different people!

          • No I’m saying if there is a big anti movement why isn’t this site inundated with followers. Instead just a handful of usual suspects making comments?

        • Hi Kisheny
          Thank you for your concern over the site’s readership. For the record, we are very happy with the blog’s performance, with the monthly number of visits continuing to rise year-on-year and 4 of the previous 8 months logging year-on-year rises of more than 40%.

          We are not embarassed by any of our readers and welcome comments from all shades of opinion.

          Paul

          • Sorry Paul if I caused offense to DOD. The embarassment I was refering to was how some financial posters sometimes forget what BB they are on and comment as if it’s some financial site

            Now that your posting Paul what is your take on the £9Billion invested by local councils in foreign fracking?

            I am very surprised to see not one post calling for their local Council to stop this or at least draw down monies invested in fracking which this whole site is based on…

            • It’s worth remembering that companies (and councils) generally have no direct control over how pension funds are invested – this stops conflicts of interest and helps to ensure that money is invested to maximise returns. The fund trustees can usually set investment parameters, and pension scheme members can ask the trustees to vary the fund’s investment strategy or can choose to take their money elsewhere (though this may be an expensive decision).

              As some posters have mentioned, there are growing question marks over whether investing pension funds in fossil fuels is a good idea these days. If we are to avoid runaway climate change many scientists believe that up to 80% of currently available oil and gas must remain in the ground. Since fossil fuel companies are generally valued by the amount of recoverable reserves under their control, this suggests that these companies may be massively overvalued and their share price at some point in the future could fall dramatically.

          • Thanks for your reply below with reference to Councils having no direct control over how pension funds are invested. But now there is a direct conflict of interests as Councils if they weren’t before absolutely know now that they are directly invested in fracking.

            This brings about two huge problems.

            Firstly If the Council so chooses to refuse permission to shale gas extraction in their County they are reducing competition so as to give their investment overseas in the shale industry an unfair advantage primarily in the American market where we receive LNG shipments into the U.K. If the shale gas industry was allowed to develop in the U.K these gas shipments would not be required and hence not having to have the shale gas from America it would not have to be liquified, transported and regasified which creates a much higher amount of CO2 emissions.

            Secondly the argument by Councils in the U.K that they are against the further extraction of fossil fuels is totally untrue to the tune of £9,000,000,000 in fracking alone

            It is a shame you feel the need to justify this investment in fossil fuel extraction Paul purely on a financial footing, ie to maximise return…

            The real problem with this whole issue is not the huge amount the Councils are funding foreign shale industry it is the fact that their actions are resulting in higher CO2 Emissions…

Add a comment

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.